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- Trusted Bitcoin exchange that has been around since 2011
- Supports many countries
- Requires ID verification, so not private
- User-interface makes it difficult for first time buyers
Founded in 2011, Kraken is a cryptocurrency spot exchange that also offers futures contracts and margin trading. As Kraken is based in the United States, and must comply with American regulations, they only offer about twenty coins for trade. That’s as compared to Binance, which offers more than one-hundred.
It’s possible to open an account on Kraken and trade cryptocurrencies without undergoing KYC or AML. However, the withdrawal limits on such accounts are low and it’s not possible to deposit or withdraw Fiat without a KYC verified account. Anyone wishing to trade futures contracts will also need to undergo a KYC verification.
Who is Kraken Best for? Day traders or Buyers?
Due to its regulatory compliance and American headquarters, Kraken is a good option for professional traders and institutional investors. Also, since Kraken offers more advanced features like margin and futures, this furthers its appeal to more sophisticated traders.
Kraken’s trading fees are somewhat below average and they begin to drop quickly once a trader starts doing more than $50,000 a month in volume. Overall Kraken is a good platform for American traders or organizations which want to be fully compliant and also execute hundreds of trades a month.
All American residents can use Kraken, save for those in New York and Washington state. In terms of international customers, there are restrictions on all of the typical countries. Citizens of the following countries cannot use Kraken: Afghanistan, Cuba, Iran, Iraq, Japan, North Korea and Tajikistan.
It’s interesting that Japanese traders are not allowed to use Kraken as Japan has a thriving cryptocurrency sector and favorable regulations in place to support it. Nonetheless, Kraken is actually very liberal in its policy towards international customers and a majority of the world’s citizens can use Kraken.
As mentioned, Kraken’s trading fees are reasonable especially given that Coinbase Pro just significantly raised their fees. Traders on Kraken who do less than $50,000 in monthly volume can expect to pay a 0.16% maker fee and a 0.26% taker fee. There are progressive discounts for increased trade volume and these top out at $10,000,000 a month at which point a trader pays no maker fee and just a 0.10% taker fee.
Kraken’s withdrawal fees are typical of most exchanges. They charge a 0.0005 withdrawal fee for BTC and a 0.005 fee for Ethereum. Other coins are significantly cheaper with XRP’s withdrawal fee being just 0.02 and Stellar Lumens’ 0.00002. A full list of withdrawal minimums and fees is available here.
As one would expect it’s possible to make crypto deposits on Kraken in any of the coins that they support. Kraken allows for unlimited crypto deposits even for traders who have not undergone a KYC verification, it’s only withdrawals which are limited.
Kraken supports Fiat deposits but a trader must complete a KYC verification before they can deposit in Fiat. Kraken supports USD, GBP, EUR and CAD. They offer a wide variety of options for those currencies to be deposited, a full list of supported deposit methods, including their associated fees, is available here.
Kraken does not support credit card deposits although they do support debit card and cash deposits but only in CAD in Canada. For USD withdrawals, Kraken charges a $5 fee.
Best Kraken Features
One of Kraken’s best features is their margin trading support. Since American customers are not legally allowed to use derivatives trading platforms like BitMEX or Bitfinex, it’s good for them to have a platform where they can take out leveraged positions. It’s unfortunate that New York traders cannot use Kraken.
Kraken’s relatively low trading fees are also a good feature. Coinbase Pro recently raised both their maker and taker fee to 0.5% and Gemini’s fees are as high as 1%. That makes Kraken one of the most affordable cryptocurrency exchanges based in the United States.
In the past cryptocurrency exchanges have gotten into trouble when they don’t have enough funds to cover all deposits. QuadrigaCX, for instance, is believed to have been insolvent before the massive hack. Had all of the their users demanded the return of their Bitcoin, the exchange wouldn’t have been able to provide it.
Kraken, on the other hand, has a proof of reserves program whereby through a third party audit they prove that they actually have all of the funds on hand that they’re supposed to. This offers a level of transparency uncommon to the opaque crypto industry and it offers the guarantee that no matter what, traders on Kraken will be able to withdraw all of their coins at any time.
Kraken and DeFi
DeFi (Decentralized Finance) is a growing movement happening on the Ethereum platform whereby smart contracts are starting to offer many of the same services as the traditional banking system. Just as the US dollar is the world’s banking reserve currency, the reserve currency in DeFi is DAI, an ERC20 stablecoin created by locking up Ether in a CDP (Collateralized Debt Position).
Recently Kraken announced that they would add DAI as a trading pair. That’s great news for the DeFi movement as every exchange that lists DAI increases its liquidity. It’s also a smart move for Kraken as the listing is bound to attract new users interested in trading the decentralized stablecoin.
Kraken is one of the more secure exchanges on the market as it has never been hacked. Some of Kraken’s founding members personally witnessed the Mt. Gox debacle. That hack caused them to take a number of steps to ensure that Kraken would never leave itself open to a similar exploit. For instance, Kraken claims that, “95% of all deposits are kept in offline, air-gapped, geographically distributed cold storage. We keep full reserves so that you can always withdraw immediately on demand.”
They also offer a number of security features for users to take advantage of. Kraken supports 2FA (Two Factor Authentication) via Google Authenticator or a YubiKey. Withdrawal confirmations via email are also possible so that even if a telephone is compromised an illicit withdrawal might be blocked.
To ensure the security of all of these systems Kraken has their own security team as well as a bug bounty, should a third party discover an exploit. Overall Kraken is one of the safer exchanges to trade on and their long security track record has proven their reliability.
Who Owns Kraken?
Kraken is owned by Payward Inc, a California based Institutional Brokerage company. The CEO of Payward Inc, as well as Kraken, is Jesse Powell. Kraken’s headquarters is in San Francisco and according to Crunchbase they have between 101 and 250 employees.
Who Founded Kraken?
- Who is Kraken Best for? Day traders or Buyers?
- Supported Countries
- Deposit Options
- Best Kraken Features
- Kraken and DeFi
- Kraken Security
- Who Owns Kraken?
- Who Founded Kraken?
- Is Kraken Safe?
- Where is Kraken Located?
- Is Kraken FDIC Insured?
- Kraken vs Coinbase
- Kraken vs Gemini
- Kraken vs Bitstamp
Kraken was founded by Jesse Powell, who continues to act as the exchange’s CEO. Powel reportedly began working on Kraken after he saw the potential that Mt. Gox might be shut down (which of course it was). Kraken opened with just Bitcoin and Litecoin as trading pairs and they subsequently expanded their operation from that small start. Since their launch Kraken has received approximately $125 million in seed funding.
Is Kraken Safe?
Given that it’s never before been hacked, and that they take security very seriously, Kraken is a safe exchange to trade on. They are one of the largest exchanges by trade volume in the United States and their volume reporting is widely believed to be accurate.
One report claimed that, “Kraken was the cleanest exchange we found with these current algorithms at over 99%.” In other words, their reported trade volume is more than 99% accurate. That’s opposed to other less reputable exchanges which engage in wash trading and report deceptive amounts of trade volume.
Where is Kraken Located?
Kraken has its headquarters in San Francisco, California. It primarily serves American traders and investors although Kraken is also popular in Canada and Europe.
Is Kraken FDIC Insured?
Kraken is not FDIC insured. On their website they explain that, “Cryptocurrency exchanges do not qualify for deposit insurance programs because exchanges are not savings institutions.” A lack of insurance is common for crypto exchanges and indeed it would be somewhat unusual to find a crypto exchange which does offer FDIC insurance.
Nonetheless, even though it lacks traditional insurance, Kraken does have more than $100 million in its own insurance fund to cover potential losses. This is similar to other cryptocurrency exchanges. Binance, for instance, promised to cover all losses after a $40 million hack.
Bittrex is perhaps the most famous example of an insurance fund. They have several hundred million dollars’ worth of Bitcoin in their insurance fund. While this is mainly used to cover leveraged trades gone wrong, it’s not hard to imagine them using it to cover losses in the event of a hack.
Kraken vs Coinbase
Kraken and Coinbase are natural competitors as they are both American regulated exchanges with excellent safety records. Both Kraken and Coinbase have been around for a number of years and offer many of the same trading pairs. That being said, Kraken does have a wider feature set. They have more coins available for trade, they offer margin trading and futures contracts whereas Coinbase is purely a spot exchange.
The advantage of Coinbase is that they have more volume than Kraken and they also have a Bitlicense allowing them to accept customers from New York state. Coinbase generally has a better reputation than Kraken, however, both exchanges are professionally run and are both significantly more reliable than some of their international counterparts.
Kraken vs Gemini
Kraken’s largest advantage over Gemini is the number of coins that they have available to trade. Gemini supports only a paltry five coins as compared to the twenty or so that Kraken supports. In addition, Gemini does not offer margin trading or futures contracts. The final disadvantage of using Gemini is their trading fee structure, which is significantly higher than Kraken’s.
As an exchange, Gemini primarily caters to institutional traders. They reduce their fees for trades done through an API connection. Also, part of the reason their trading fees are high to begin with is that Gemini is fully insured and they collect accreditations and licenses the way shady exchange collect lawsuits.
That makes Gemini a good fit for professional traders and investors who are willing to pay more for the most upstanding exchange. However, for most retail traders Kraken, with their lower fee structure, is a better fit.
Kraken vs Bitstamp
Bitstamp is a European exchange which has the honor of being the oldest crypto exchange still in existence. That certainly speaks well to their safety record and good business sense, but it doesn’t mean Bitstamp offers that many advantages. In fact, like Gemini, they only have a handful of coins available to trade, as compared to Kraken’s more exhaustive set of trading pairs.
Kraken and Bitstamp have similar trading volumes, although Kraken usually has more volume. At 0.5% for both maker and taker, Bitstamp’s trading fees are higher than Krakens. One advantage of using Bitstamp is that they have a lower minimum trade volume. The minimum trade on Bitstamp is 0.001 BTC (equivalent to about $8.50 as of publication).
Kraken on the other hand has a different minimum for each coin but this is often in excess of $10 per trade. That makes Bitstamp a better option for anyone planning to execute small trades. Perhaps one of the best advantages of using Bitstamp instead of Kraken is that Bitstamp has a popular mobile App. The App offers everything that the web based platform does, from deposits to trades, making it easy to trade crypto when you’re away from the computer.
Kraken at one point had an iOS app but it was discontinued. Kraken makes no mention of an App being released in the future, leaving us to believe that Bitstamp is the best option for anyone who needs to have access to a trading platform at all times.
Review By: Jordan Tuwiner
Rating: 4.5Buy Bitcoin at Kraken
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